Your Construction Business Could Be Liable to Secondary Buyers: Protect Yourself

In an opinion published in the late summer 2016, Pennsylvania’s Superior Court held that a lawsuit brought against a home builder by a secondary purchaser with whom they never interacted could proceed. In 2008, Hellings Builders, Inc. built a new home and sold it to the Witsky family. Subsequently, in 2011, the Wiskys sold the home to the Adams family. After taking ownership of the home, the Adams family came to believe that stucco had been applied improperly, allowing allowed moisture infiltration. This was contrary to the builder’s original literature, so the Adams family sued.

Adams’ claimed that Hellings had breached a key consumer protection statute known as the Unfair Trade Practices and Consumer Protection Law, even though they did not buy the house directly from Hellings, had no contract with Hellings, and had never met them in person. The court held that even though there was no direct contract, it was foreseeable that the initial homeowners might resell the home, and the second buyers could rely on representations from the builder including in printed flyers and on their website, touting the quality and methods of construction used.

At this early stage, the court did not question the Adams’ expert, who claimed that “the stucco system did not comply with” the three-coat stucco system under the International Residential Code (“IRC”) standards that the builder had promised to follow. Thus, the appellate court will allow the homeowners to proceed with their suit.

The take-home lesson for worried home builders is that your promotional materials should correctly describe your work. Even if your personnel never speak to a subsequent buyer, if they can prove that something from your flyers or website misrepresented your work on a home, you can find yourself defending a lawsuit, much as you would if the original owner claimed to have been misled. If you receive an angry demand from a homeowner, you should consult legal counsel, and be sure to review all of the statements providing to your original buyer to ensure you delivered exactly what you advertised.